Begin a
Partnership

Some services described
herein are provided by
The Gelfand Group LLC.

Schedule a Free
Consultation

Featured Article

Private Company Valuations Are Heading Higher

Private company owners frequently question, “When is the right time to sell a business?” Today’s low interest rates and ample liquidity have generally increased the value of private companies and this environment presents attractive sale opportunities for company owners. With the supply of capital flowing into the coffers of private equity firms and other financing sources exceeding the availability of opportunities, the supply/demand imbalance favors the business owner. Moreover, p...

Private Company Valuations Are Heading Higher

By Robert Bruml and Andrew Gelfand | Published on 4/24/2015 1:45:22 PM

Private company owners frequently question, “When is the right time to sell a business?” Today’s low interest rates and ample liquidity have generally increased the value of private companies and this environment presents attractive sale opportunities for company owners.With the supply of capital flowing into the coffers of private equity firms and other financing sources exceeding the availability of opportunities, the supply/demand imbalance favors the business owner.

Moreover, private equity has flowed well beyond the core industries in Northeast Ohio to include almost all areas of the economy including health care, business services, media and technology. If you think your company is too small, it may complement an existing platform company owned by a private equity firm.If you are reluctant to sell the entire business, you may consider a “minority recapitalization” with private equity or an alternative lender that can provide liquidity without a change of control.Strategic buyers also have aggressively reentered the acquisition market to complement organic growth.

Today’s economic environment is conducive to meeting your financial goals. With low interest rates and robust financing markets in place, company owners should examine strategies to enhance the value of their companies.Some of the value drivers and strategies to consider for both a sale or recapitalization include:

Present financial results which are “restated” but supportable

Undertake a “quality of earnings” analysis

Emphasize new product or service offerings

Build brand recognition and market reputation

Build depth in the management team

Complete key agreements with customers and suppliers

Create a defensible market position with diversification

Invest in proprietary technology or patent portfolio

Make the case for market, product or financial synergies

Develop financial projections that are credible

Eventually interest rates will rise and there will be a pullback. The present timing, however, offers a unique opportunity for private owners to achieve liquidity at favorable values.Having a proactive and experienced M&A advisory firm should be part of your “value added” planning if you are considering a sale or financing.